The purpose of this project is to study the HBV genome by computer and molecular hybridization analysis. Our data suggest that HBV and retroviruses evolved from a common ancestor. This is a significant finding because it demonstrates the relatedness of two diverse virus families. We find that: (1) both HBV and retroviruses utilize a unique mechanism of genome replication by reverse transcription of RNA; (2) highly conserved regions of HBV proteins share considerable homology with retrovirus nucleocapsid, protease, and polymerase proteins; (3) the HBV polymerase shares organizational similarities with the polymerase gene sequence of retroviruses and retrovirus-like genetic elements; (4) genetic analysis and low stringency blot hybridization indicates that HBV DNA sequences are most closely related to MLV DNA sequences; (5) HBV possesses two previously undiscovered open reading frames which may represent genuine gene sequences. Interestingly, one of the new open reading frames is located on the DNA plus strand of the double-stranded virus genome. This also appears to be a unique feature of retroviruses that encode proteins involved in transcription activation because we find a plus strand DNA ORF in the human immunodeficiency virus genome, and in the genomes of related retroviruses of humans and animals. Overall, HBV and retorviruses share a common mechanism of genome replication, possess homologous nucleotide and amino acid, and have genomes that share a similar organization of genes. Therefore, it is probable that these virus families evolved from a common ancestral virus.